Tenants behaving badly insurer warns

The nation’s landlords are leaving themselves exposed to the country’s worst tenants by failing to carry out basic checks, insurer AXA has warned.

With the rental market’s peak season about to start, AXA reveals just how many of the UK’s estimated 8.3 million tenants are behaving badly and how poorly protected landlords really are when the worst happens.

Research carried out by AXA, one of the UK’s largest insurance companies, revealed that almost 60 per cent of tenants admit to breaking the terms of their rental agreement, and a third had broken the law in relation to their rental. In particular:

– Twenty-six per cent of tenants pay their rent late (equivalent to 2,158,000 tenants nationwide)
– One in 10 tenants admit to having done a moonlight flit to avoid paying the landlord money (equivalent to 830,000 tenants nationwide)
– Eighteen per cent have kept pets in the property without the landlord’s permission (equivalent to 1,494,000 tenants nationwide)
– Fifteen per cent have received complaints from neighbours for excessive noise (equivalent to 1,245,000 tenants nationwide)
– Eight per cent have sub-let to someone else without the landlord’s permission (equivalent to 664,000 tenants nationwide)

At the most serious end of the scale, eight per cent of tenants – equivalent to two thirds of a million tenants nationwide – admit to actually committing a crime on the landlord’s premises, and a similar figure (10 per cent) say they’ve had the police called to the property.

While these tenants remain in the minority, landlords do carry a legal responsibility to ensure that their premises are not used for criminal purposes. Under the Misuse of Drugs Act, landlords can face prosecution if a tenant is found to be producing cannabis or banned substances on their property.

In October, the new Immigration Bill is also set to come into force, placing greater responsibilities on landlords to vet their tenants. Under the new law, landlords who fail to check a tenant’s right to be in the country will face a fine of up to £3,000 if the slip-up means they have someone on their property who is in the country illegally.

AXA warns that while the responsibilities on landlords to keep their houses in order are getting stricter, many are still failing to carry out any checks on their tenants or even visit their properties at all. The research found that 38 per cent of landlords carry out no checks on prospective tenants, and only five per cent carry out a criminal record check. Meanwhile, a third of landlords never visit their property during a rental.

And despite many landlords relying on rental income to cover expenses such as mortgage payments and basic living costs, few of them check if their tenants have the means to pay their rent. Just under a third of landlords: a) carry out a credit check (31 per cent), b) ask for employer references (27 per cent), or c) ask for references from previous landlords (29 per cent).

Tenancy agreements are also an important part of the picture, giving the landlord a firm foundation to evict non-paying tenants or claim damages for financial loss caused by the tenant. AXA found that landlords are getting better on this front – this year’s study revealed that 75 per cent of rentals are now based on a formal agreement, compared to just 52 per cent at the beginning of 2013.

When the results were broken down by region, gender and rental bracket, some interesting trends emerged. All in all, the profile of the UK’s riskiest tenant would be:

– Male – men were 18 per cent more likely to have infringed the law in relation to their rental (committing a crime on the premises, leaving without paying, theft, etc.).
– Aged between 18 and 24 – tenants become gradually better behaved with age, for instance, 64 per cent of tenants in this age range had broken their rental agreement, a figure which falls to just over a third in the 55+ category. A similar pattern emerges when asked about outright criminal behaviours.
– In the £700 to £1,500 per month rental bracket – just 2.5 per cent in the very lowest rental brackets (under £700 per month) said they’d committed a crime on the property, a figure which rises tenfold to 24 per cent in the £700 to £1,500 categories. This middle category also sees far higher rates of moonlight flitting and excess noise complaints (double the national average).
– Located in the West Midlands – This region had the highest proportion of tenants who admitted to breaking the law or terms of tenancy. Sixteen per cent of tenants in the West Midlands admitted to committing a crime on the property (compared to eight per cent nationally and three per cent in the most crime-free region of East Anglia). They also came out worst on noise complaints, sub-letting and smoking.

“During the recession, we saw a significant increase in the number of accidental landlords – people who never expected to rent out their property, but couldn’t sell a former home or needed the additional income. With a booming rental market, they aren’t going anywhere”, said Darrell Sansom, Managing Director at AXA Business Insurance.

“When you first start renting out property, you may not realise all the legal implications and duties involved. Last year, for instance, we found that a third of these landlords are, often inadvertently, breaking laws on safety checks, and a quarter have the wrong or no insurance.

“In addition, landlords are under more scrutiny and subject to heavier legal penalties than ever before. HMRC launched a crackdown on landlords whose tax affairs aren’t in order this March, and May’s Immigration Bill introduced fines for landlords who fail to check a tenant’s right to be in the country.

“While legislation toughens, we need to make sure that enough is being done to inform and educate landlords too. Certainly, our experience is that many new landlords aren’t wilfully failing in their duties, they simply aren’t aware of all their obligations and commitments.”